8 pm

Mr. John Butterfill (Bournemouth, West):
There is a danger that this debate may develop into a eulogy to the Minister of State, Department of Social Security, the right hon. Member for Birmingham, Perry Barr (Mr. Rooker), but I would like to add my personal congratulations to him on his parliamentary career, because this may be the last opportunity that I shall have to do so in a debate. What he has done in his present Department has been quite outstanding.

More particularly, I remember the right hon. Gentleman in his role on housing, a period when he and I crossed swords on more than one occasion. The contribution that he has made to the development of housing policy--in particular, to the maturity with which the Labour party

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now approaches the issue of the private rented sector, and to the recognition of the contribution that it can make--has been extremely valuable. I should like to take this opportunity to thank him, and to congratulate him on behalf of us all on that element of his work.

It is always difficult to speak after the right hon. Member for Birkenhead (Mr. Field) and I am sorry that he is no longer in his place. He and I tend to agree on many of the issues on which we jointly speak: on pensions, for example, and other matters. It is particularly difficult for me to speak after him this evening, because he said just about everything that I wanted to say in my own speech. I should like to pick up some of the points that he made, particularly the emphasis that he placed on the pernicious influence of organised fraud on social security benefits.

According to the raw statistics on national insurance numbers, which were discussed earlier, there are some 82 million national insurance numbers, but only 48 million people of employable age. That leaves a difference of 34 million. It is difficult to believe that that difference could be entirely due to factors such as the national insurance numbers given to people under employment age for various reasons; the national insurance numbers that are continued in respect of deceased persons for certain reasons; and the national insurance numbers that are given to temporary foreign workers.

That last factor relates to a legitimate activity. In my constituency in Bournemouth, there are a large number of language schools. In the summer, a great many students come over to attend the schools, mainly from other parts of the EU. Many of them want to work part-time while they are here, as they are perfectly entitled to, as citizens of the European Union. They get a national insurance number, they retain it and it remains on the system. That is perfectly appropriate. However, it is difficult to believe that those rather limited examples, which may explain some of the difference, could amount to a difference of 34 million national insurance numbers. This is a serious problem, and it needs to be addressed.

The Bill goes some way towards addressing those issues and helping to reduce the clear element of fraud demonstrated by those numbers, and to that extent I welcome it. There has been some dispute about the level of fraud, but most people seem to agree that it is worth about £7 billion a year, although it is difficult to quantify exactly. These are huge numbers, and the burden that that fraud places on ordinary, decent, hard-working people is colossal. That is unfair on the many people who pay their taxes.

Many of my constituents are elderly, and a large proportion of them are retired. Many of them continue to pay tax, but in doing so they are often supporting people who are deliberately defrauding the system: the people about whom we are concerned. We are not so concerned about those who make innocent errors, or who find the system extremely complex. Most of us have had people come to our constituency surgeries and say, "I just didn't understand. It was all too complicated, and I made an error when I filled in the form. I didn't know I was supposed to let them know when certain events occurred and I failed to do it."

Many of my elderly constituents are confused about the system and they make innocent errors. They are not the people about whom we are concerned. Indeed, the Bill

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proposes ways of mitigating the effect for those who make innocent errors, even more than once. We are, however, concerned about those who deliberately set out to defraud the system and their fellow citizens. Given the scale of the fraud, the effect that it has on everyone else, and the way in which it denies us the opportunity to spend public money on other things that we all consider desirable--health, education or whatever--there is an urgent need to tackle the problem.

I therefore welcome the additional powers in the Bill to obtain information. I also welcome the ability to use electronic access to data, although I shall say a little more about that later. There are some concerns about those additional powers, especially about how they will operate with those who will be providing a co-operative system with the Government.

We know from the responses of organisations such as the British Bankers Association and the Council of Mortgage Lenders and from the telecoms companies and others that they are worried that they will have to bear an irrecoverable financial cost as a result of the information that they provide. They also feel that it is a little unfair that they operate systems now at considerable expense, and that, by co-operating with the Government, they will get no benefit in return.

The suggestion by the right hon. Member for Birkenhead that we should participate in organisations such as the credit industry fraud avoidance system is a good one. That would make it much more palatable for those who are co-operating in this way. Let us make no mistake: extremely sophisticated systems are now available that can reduce fraud dramatically. The telecoms companies have now put in place very sophisticated computer-based systems that can detect up to 80 per cent. of fraud. It would be a great advantage to everyone if we could get close to even half that percentage in relation to social security fraud through the use of those systems. The Government will need to look carefully at the way in which the agencies are reimbursed for the costs that they will undoubtedly bear in co-operating.

Similarly, I welcome the ability to co-operate, albeit limited, with overseas authorities. There is no doubt that much of the organised fraud is transnational. Gangs of people are being brought into this country, and they are defrauding the system. Organised criminals are bringing in so-called asylum seekers, and exploiting them and the benefit system. I want those people dealt with.

I do not like the idea that people operate middleman agencies to place genuine--or possibly genuine--asylum seekers on behalf of one authority in another. In Bournemouth, a lot of people are placed in hotels and guest houses on behalf of London and Kent local authorities through a middleman agency based in Eastbourne. It takes a cut of the money that the Government and the taxpayer provide to support those people, but we did not institute such support payments for the unfortunate people who may be genuine asylum seekers in order for some middleman company to take a cut on the way. I hope that that is one of the first problems that we will start to eliminate by making the whole process illegal; and if the Government can amend the Bill to achieve it, they will do a service to the whole community.

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Although I welcome the Bill, I have to say that it is too little, too late. The Secretary of State referred to the ancient computer systems that the Government inherited when they took over in 1997. There is no doubt that some were pretty old, but the problem is that systems age very quickly. Those that we bought for ourselves or our children only three or four years ago look terribly out of date today and no doubt the ones that we are buying this year will look even more out of date a year from now. The whole industry is moving at an incredible rate. We must therefore continually update systems with the best possible technology that we can afford--but I am not sure that the Government have done that.

Before Christmas, I visited my local Department of Social Security office, following which I wrote to the Secretary of State. I had the courtesy of a reply from his colleague, the Under-Secretary. It is worth pointing out the difficulties under which such offices labour and about which I wrote to the Secretary of State in November. The breakdown of the national computer system caused enormous difficulties and obviously contributed to making fraud easier.

Furthermore, inadequate information technology systems are in place. The Benefits Agency has the following: an income support system, a personal details system, a jobseeker's allowance system, a pensions system, an incapacity benefit system, a departmental central index and a repayment depository. With the exception of the personal details system, none is capable of interfacing with any other. I accept that that was the case when the Government came to office four years ago, but it is still the case today and four years is a long time, particularly in respect of updating IT systems. The Government have been slow to deal with a problem that was getting progressively worse.

The filing system that may be needed to combat fraud is even more worrying. To this day, the one in my local office is paper based. Furthermore, only a limited number of records are held in Bournemouth; the rest are sent off to remote storage in Devon. If people need access to the system to check records, papers have to be transported from Devon to Bournemouth.

How long would any private financial services company survive with systems and filing systems of such antiquity? We know the answer: it would not survive at all. As custodians of the public purse, the House and, in particular, the Government have a duty to ensure that the systems are such that they protect the financial interests of our citizens, but they do not do so at the moment.

The Under-Secretary's letter to me said that

"the Chancellor announced that £1.87 billion over the next three years"

would be spent

"in modernising the Social Security system, including the replacement of Information Technology systems."

So over the next three years, part of that £1.87 billion may be spent to update IT systems. She continued:

"The new IT will help reduce the cost of benefit fraud and error"--

we must not forget error--

"by over £1 billion a year by 2005/2006."

The money is unlikely to achieve any savings, nor will it be spent during this Government's first four years. It will not even be spent in their first six years, but we may be

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there by the seventh and we may realise some benefits by 2005 or 2006. There is a broad cross-party consensus here, but the Government have to bear some responsibility for the fact that it will be 2005 or 2006, on their own admission, before any improvement in IT systems helps us to prevent benefit fraud.

The problems of organised crime described by the right hon. Member for Birkenhead occur in my own constituency. In my letter to the Secretary of State, I pointed out that areas such as mine, which have an unusually large transient population, are particularly prone to such difficulties. Some people move to the holiday areas in winter, when accommodation is available, and then move on. Others are attracted there in summer by casual work in the tourism industry. There is a high turnover of people and that, of itself, allows for fraud and organised fraud.

Believe it or not, there are those who organise transient workers. In areas such as mine, where that tends to be a problem, we need to apply more resources. Such areas also contain large numbers of asylum seekers and there is no doubt in my mind that in many cases organised gangs bring people in and then "employ" them. We have seen examples of that reported in the national press--it is a pernicious activity, because they are organised into crime, prostitution or sweated labour that pays poor wages, yet the maximum benefit possible is claimed for them by people who can only be described as gangmasters.

For all those reasons, we must concentrate resources where such activity occurs, but the Bill will not achieve that. Although there is a national problem, there are particular local difficulties in certain towns and cities in the United Kingdom. We must achieve a determination to target resource where it is most likely to bear fruit, but there is no clear evidence that that is what the Government intend. I welcome the Bill and the degree to which it will contribute to solving the problem, but we must consider a lot of other measures for the elimination or substantial reduction of benefit fraud.